[codypo]

I have had a few interesting experiments here in the past year.

Experiment 0: I bought a hotel affiliate site off of flippa. It did pretty well initially, but I didn't do enough investigation into how the previous owner had been generating traffic. In short, there was a lot of untoward stuff going on. As I was getting all of that straightened out, the site got (deservedly) banned from Google's index for a few key terms. I made my money back and learned a valuable lesson: don't buy sites off of flippa.

Experiment 1: I created a few different sites around a big product launch, and monetized via product reviews and the Amazon Affiliate program. This worked very well for a period of time; the site was grossing $100 a day for several weeks with essentially 0 work. Slowly, my site dipped in the rankings for the key terms as much bigger players got their act together. From this, I learned that one-off sites can be valuable, but probably not in the long term. I should've sold the sites at their peak.

Experiment 2: I wrote some algorithms to find underpriced stocks and then examinate a few strategies around that security's options. This was actually a lot of fun. Based on my program, I ended up buying out-of-the-money puts on 5 or 6 different stocks. I'm sitting on a small profit right now. The next step is to exit my positions, finetune the algorithms based on a few key things I learned, and put more money into action.

[codypo]

One note here: Experiment 2 isn't exactly passive income, not until I get a lot more comfortable with the code. That's the goal, though, and I think it's the likely choice for the greatest amount of income (and least amount of work) in the long run.

[thejerz]

Are you willing to tell more about Experiment 2? What kind of strategy are you using? What development platform (e.g. what language and libraries and what OS)? What trading platform (e.g. what brokerage / API)? Where did you get your test market data from / how much did you pay? What other strategies did you try first that didn't work? What blogs or sites do you read on the subject? What is your background in? Finance/Econ? Or programming? What other details would you like to offer? Some of us are very interested in this field. :)

[nickwoodhams]

I am interested as well. I've studied something similar, the idea is to find the underpriced option in a group. The premise is that the inefficiency in the market will work its way out in hours/days. But it's pretty hard to find a substantial price inefficiency based on my research. Needed a large amount of money to trade.

[slaven]

In defense of Flippa: I bought a site there recently. Checked it out, the owner was a stand-up guy, I even released the escrow early to help him out (he didn't ask for it). He continued helping with the site transition even after he received the money.

So buyer beware but there are some gems in there...